São Paulo – A study released this Tuesday (3rd) by the United Nations Conference on TRade and Development (Unctad) shows that Palestine fails to collect US$ 300 million per year in import, customs, and value-added taxes. The funds are collected by Israel instead, which clears Palestine’s imports and then transfers them to the occupied territories. According to the study, part of the money does not make it into the coffers of the Palestinian Authority, and “leaks” while under Israel’s control. In the communiqué released alongside the Report on Unctad assistance to the Palestinian people: Developments in the economy of the occupied Palestinian territory, the institution claims that in 2012 the amount of taxes not received by the Palestinians was even higher than the average calculated by the Unctad, at US$ 305 million. The sum is equivalent to 17% of Palestine’s total tax revenues, and would suffice to cover 18% of the public wage bill.The transfer of taxes from Israel to Palestine is provided for in the Paris Protocol signed in 1994m which allows for commercial transactions between Palestine and Israel to not be levied. However, products from other countries imported into Palestine are required to pay tax upon entry into the occupied territories, as in any other country. The “leakage” of taxes described by the study includes import taxes and value-added taxes, but does not include tax collected from Palestinian workers in Israel or in settlements, or taxes pertaining to exploration of Palestine’s natural resources. The Unctad also mentions the smuggling of goods which should reach Palestine, but don’t. According to the study, it is difficult to ascertain the value of these goods, but they account for 25% to 35% of the occupied territories’ imports.“If this "leakage" could be curtailed, and the money transferred from the Israeli treasury to the Palestinian treasury, the resulting increase in revenue would give the PA greater fiscal policy space and help to expand economic growth and employment. The gross domestic product of the OPT would increase by 4 per cent, and employment would increase by 10,000 jobs per year,” the report contends.

Other challenges

Apart from the money which does not make it to Palestine’s treasury, the Unctad study claims that the occupied territories must tackle challenges such as unemployment, inflation, poverty and low wages. In 2012, the GDP of the occupied territories was up 5.9% from 2011 to US$ 10.2 billion. The unemployment rate was 26.7%. In all, 850,000 Palestinians were jobless in 2012. Among young people, 50% have no occupation.“The unemployment rate, high as it is, understates the severity of the socioeconomic conditions for reasons such as declining real wages, low labour productivity, high dependency rates, long duration of unemployment spells, which doubled from 2000 to reach 12 months in 2012, and the low participation rate, which was below 44 per cent in 2012,” according to the study. The document also notes that Palestine’s occupation by another country hampers its development, makes it more difficult for Palestinians to find work, reduces school attendance among children, and “creates pressures” that lead to child labor.